Blockchain in supply chains; how we aim to make your (work)life easier

March 7, 2022

Blockchain has been buzzing for years. But there's more to blockchain than cryptocurrency and smart contracts. OpenDairy conducted a feasibility study with a group of students to learn more about the possible applications in our marketplace.

One of the reasons we started OpenDairy was a very practical one. We experienced that the execution of orders was often very inefficient and time consuming. Even though recurring orders require the exact same process, the time spent per order did not improve. Communication through email, different versions of the same document, specific loading instructions; all easily overlooked and sensitive to mistakes if not handled efficiently. How could this old-fashioned way of working be improved with technology?

In this context, blockchain and smart contracts are obvious topics to investigate. In tech, buzzwords and abbreviations are hot, but the trader in us craves a simple and most of all, pragmatic explanation. 

In cooperation with Interreg and Blockstart, the brightest students of Windesheim University conducted a blockchain feasibility study for OpenDairy. It was amazing to see how quickly the students caught on to the concept of our managed marketplace. However, the customer journey currently ends after a deal has been concluded, but that’s when the fun actually starts! So we have some ideas on how blockchain can add value to OpenDairy and our users.

But first, a brief overview of the key characteristics of blockchain: 

  • Decentralized Network & transparent transactions
    Thanks to the distributed ledger technology, all parties in the supply chain have access to the same data. A majority consensus manages any data alterations so no one party can single-handedly change information in any of the blocks.
  • No Intermediaries
    Smart contracts can automate various tasks traditionally requiring human involvement as well as remove middleman, making supply chain management more cost-efficient. 
  • Trusted Environment
    Blockchain keeps a permanent record of all supply chain histories, guaranteeing tamper- proof digital document trails and building trust among network participants. 
  • Secure Operations
    Cryptographic keys protect every piece of data, with any corruption attempt immediately visible to the entire network. Private blockchains allow setting separate permissions. 
  • Interoperable Networks
    Blockchain connects suppliers, distributors, manufacturers, and retailers in a single ecosystem where all parties have access to the same data.

After absorbing all that wisdom, the question remains; what can blockchain contribute to a more efficient supply chain in dairy trade?

The execution of a dairy ingredient order consists of many steps and rules, and more importantly; many players involved. Intra-EU/US trades are relatively straightforward, but it gets complicated when goods need to be exported to overseas destinations. Involved are the buyer and the seller, but also governments, certification authorities, forwarders, shipping lines and banks. They all play their part in successfully completing the transaction. The shared interest of all parties is to do this as fast and cost-effective as possible! 

After turning our model upside down, and inside out, the students identified several opportunities for applying blockchain technology in our platform. One of them is a cryptocurrency for (dairy) commodity transactions, a commodity stable coin if you will. This is a very interesting angle considering payment difficulties and the lack of hard currency in some regions. However, in the phase we’re in this falls into the category of “moonshot” ideas. We like moonshots, but as a startup we have many dreams and we should be realistic in selecting the ones that we can make come true in the short term.

The second idea is much easier to implement and will provide immediate value to all participants in our ecosystem. This opportunity concerns the many documents and data that accompany each trade and the consecutive actions that are taken along the way.

We want our marketplace to become a portal in which all involved parties get easy and accurate access to the information they need, at the time they need it. We can chop this up in a few main categories:

  • Logistics data

Forwarders are quite good at this. Not only will the container numbers, vessel names, ETA’s and ETD’s be updated automatically, the buyer will also get an insight into the greenhouse gas emissions and reliability of the options available.

  • Financial data

Payments always trigger an action in the value chain. Issuing invoices promptly and getting notified of incoming payments will improve the cash cycle of a transaction. Payments can even be released automatically when all the requirements of a smart contract are fulfilled. 

  • Documents

No more emails, revisions and messy administration. We allow all participants to upload the documents to our order management portal, in which the buyer (or other relevant party) can approve or reject the drafts uploaded. When all documents are checked by the assigned party, the payment can be released. Like a digital L/C, if you will. 

  • Track & Trace

When we order a package as a consumer, we know when it will arrive. We also get notified when the ETA changes, or a delay occurs. We will do the same in B2B transactions; simply log in and check the ETA’s of your orders. And get notified when something changes, so you can spend your time on more important matters. 

  • Certification data

Blockchain technology is very suitable for certification records. No more expired certificates or double checking whether the certification is the right one. Ultimately, we believe all the certifying bodies can share their data in a simple chain, with one version of the truth. 

  • Quality data

Do you need signed COA’s from accredited labs? Why not have a database in which the results of each lot are easily logged, verified and accessible for all parties in the transaction?

As you can see, enough ideas and enough work to be done. And we didn’t even touch on the subject of sustainability, which in dairy also needs a unified and consolidated approach.

But first things first. In the coming weeks we will ask you for your feedback on which components you consider most valuable. And we will start building our order management module for your convenience.


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